There has been a rise in the number of ‘finfluencers’ (financial influencers) on social media over recent years, after a surge in online DIY investing.
Last month, the Financial Conduct Authority interviewed 20 finfluencers under caution for touting financial services products illegally.
The FCA also revealed that it had issued 38 alerts against social-media accounts operated by finfluencers that might contain unlawful promotions.
This came after the regulator brought charges in May against nine individuals, many of whom were former reality TV stars, in relation to an unauthorised foreign exchange trading scheme promoted on social media.
The qualifications are there to give both brokers and customers confidence that they
are dealing with a professional adviser
These finfluencers are not authorised by the FCA and are unqualified to give financial advice to their followers, mostly younger people. There has been an increasing number of young people falling victim to scams, and finfluencers can often play a part.
Nearly two-thirds (62%) of 18- to 29-year-olds follow social-media influencers. Of these, 74% said they trusted their advice, while 90% had been encouraged to change their financial behaviour, the FCA found.
Access Financial Services mortgage services and marketing director Nick Jones suggests that finfluencers sit in one of two camps: those whose social-media content is considered ‘responsible’ by the FCA, and whose informed and educated advice can be an asset to borrowers; and unregulated individuals, who can cause great harm.
Jones says: “Gladly, the FCA has been taking a great interest in this since 2023 and, among other things, has asked that major social-media platforms remove harmful content.”
An industry standard helps to give consistency, and the qualification provider can ensure that the material keeps up with market changes
Like many trusted advisers, Jones says at Access FS “mortgage advisers sit in the first camp, with more and more of them using social media such as LinkedIn to share their thoughts and experiences with peers, clients and prospects”.
Although it has never been easier for an individual to have a platform and to potentially reach a large audience, Just Mortgages and Spicerhaart chief executive John Phillips says the industry needs to be “unified in educating consumers that these finfluencers are not qualified and in some cases are acting unlawfully”.
Phillips explains: “This is a real issue for the wider financial services market and it needs regulating as many customers will be given the wrong advice. As experienced, qualified brokers, we have to demonstrate our knowledge and the value we can offer as fully qualified and fully authorised mortgage and protection advisers.”
UK Moneyman mortgage adviser Wayne Dewsbury also highlights “credibility and trust” as two key words that are linked to brokers, but adds that the pool of qualified talent that comes from big banks and building societies has “greatly diminished”. Increasingly, he says, it has been left to brokerages to “grow their own advisers, with all the support, resource and cost it demands”.
The knowledge comes when working on cases and learning on the job. It’s an ongoing journey, too
Aspiring mortgage advisers have to complete a qualification in mortgage advice. The current CeMap requirement is a Level 3 qualification, split into three modules incorporating seven compulsory units.
Module one covers general UK financial regulations, module two is mortgage specific and module three is an assessment of how the knowledge is put into giving sound mortgage advice.
Classroom training courses or home study are available. There is also a Level 4 CeMap Diploma delving further into the financial market and the housebuying process.
However, as Xpress Mortgages mortgage adviser Rachel Lummis highlights: “Passing CeMap does not make you a mortgage adviser.
“It’s not something you can learn overnight; the exam is just the start. The knowledge comes when working on cases and learning on the job. It’s an ongoing journey, too, with new products and ways of borrowing, and constant changes to keep up with.”
With the rise of social media, do the processes and qualifications of CeMap need updating to reflect the way the world is changing because of technology?
The industry needs to be unified in educating consumers that these finfluencers are not qualified and in some cases are acting unlawfully
Dewsbury says, since the 1990s, “the flexibility of access to the exams has improved enormously, without the need to wait three months for the next sitting”.
He adds: “As long as content continues to be updated and relevant, I’m sure it will continue to hold its value as a recognised qualification.”
L&C Mortgages associate director of communications David Hollingworth agrees that the CeMap qualification needs regular reviewing to ensure it remains relevant.
Hollingworth says: “An industry standard helps to give consistency, and the qualification provider can ensure that the material keeps up with market changes.
“It should help brokers to recruit those that have achieved a recognised level and to train newer advisers to meet those standards.
“However, updating of qualifications isn’t something that should be dismissed and the qualification provider will no doubt keep that under review.
The FCA has been taking a great interest in this since 2023 and, among other things, has asked that major social-media platforms remove harmful content
“Market trends can change but principles often less so. But ultimately the qualifications are there to give brokers and customers confidence that they are dealing with a professional adviser.”
While there are no arguments against reviewing the CeMap qualification to ensure it is as up to date as possible, the industry and the FCA can play their part in helping to prevent young people, and the wider population, from falling victim to unauthorised finfluencer advice and scams.
See Broker Focus – Michelle Lawson – for more on the need for financial education
This article featured in the November 2024 edition of Mortgage Strategy.
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